<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended April 1, 1994
Commission File Number 2-60487
United Grocers, Inc.
(Exact name of registrant as specified in its charter)
Oregon 93-0301970
(State or other jurisdiction of (IRS employer identification no.)
incorporation or organization)
6433 S.E. Lake Road
Post Office Box 22187, Milwaukie, Oregon 97269
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 833-1000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No .
Indicate the number of shares outstanding for each of the issuer's classes
of common stock, as of the latest practicable date. 618,293 shares of
common stock, $5 par value, as of May 12, 1994.
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The following unaudited consolidated financial statements of United
Grocers, Inc., and subsidiaries for the periods ended April 1, 1994 and
April 2, 1993, include all adjustments which management considers necessary
for a fair presentation of the results for the interim periods.
In 1992-93 the Company changed its method of accounting for the
general wholesale grocery category of inventories from the last-in, first-
out (LIFO) method to the first-in, first-out (FIFO) method. Refer to the
Company's annual report on Form 10-K for the year ended October 1, 1993,
for details of changes.
In 1993-94 the Company adopted FASB #113 (Accounting for Reinsurance
Contracts). Refer to Part I, Item 2, for a description of the effect of
this change on the balance sheet.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, Grocers Insurance Group, Inc., Grocers
Insurance Agency, Inc., UGIC, Ltd., Grocers Insurance Company, (formerly
United Employers Insurance Co.), United Workplace Consultants, Inc., U.G.
Resources, Inc., United Resources, Inc., BAT Enterprises, Inc., Western
Passage Express, Inc., United Store Development, Ltd., Employee Management
Services, Inc., Western Security Services, Inc., Affiliated General Agency,
Inc. and Northwest Process, Inc. All intercompany balances and
transactions have been eliminated upon consolidation.
<PAGE>
UNITED GROCERS, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 1, 1994, and OCTOBER 1, 1993
<TABLE>
<CAPTION>
(Unaudited) (Audited)
ASSETS 04/01/94 10/01/93
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 10,998,810 $ 18,807,473
Investments 38,384,892 34,397,583
Accounts and notes receivable 48,149,638 40,514,016
Inventories 66,279,056 73,866,416
Other current assets 4,807,047 3,477,033
Deferred income taxes 2,817,683 2,823,829
Total current assets 171,437,126 173,886,350
NON-CURRENT ASSETS:
Notes receivable 40,810,063 33,250,562
Investment in affiliated company 1,929,929 1,929,929
Other receivables 8,093,538 8,875,247
Other non-current assets 4,433,801 3,156,301
Total non-current assets 55,267,331 47,212,039
PROPERTY, PLANT AND EQUIPMENT -
(Net of accumulated depreciation
and amortization) 61,022,081 59,501,356
TOTAL $287,726,538 $280,599,745
</TABLE>
<PAGE>
UNITED GROCERS, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 1, 1994, and OCTOBER 1, 1993
(continued)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
LIABILITIES AND MEMBERS' EQUITY 04/01/94 10/01/93
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable - bank $ 27,910,416 $ 24,730,400
Accounts payable 55,535,890 57,886,107
Insurance reserves 29,586,849 29,021,276
Compensation and other taxes payable 2,015,163 2,256,970
Other accrued expenses 6,746,804 4,143,272
Members' patronage and other refunds payable 1,430,000 7,214,927
Current installments on long-term debt 7,001,347 6,814,221
Total current liabilities 130,226,469 132,067,173
LONG-TERM DEBT 113,388,848 105,539,231
DEFERRED INCOME TAXES 3,281,135 3,281,135
DEFERRED INCOME 577,137 599,804
MEMBERS' EQUITY:
Common stock (Authorized, 10,000,000 shares
at $5.00 par value; issued and outstanding,
627,580 shares at April 1, 1994 and 632,312
shares at October 1, 1993) 3,137,900 3,285,755
Additional paid-in capital 22,152,781 21,006,563
Retained earnings 14,962,268 14,820,084
Total members' equity 40,252,949 39,112,402
TOTAL $287,726,538 $280,599,745
</TABLE>
<PAGE>
UNITED GROCERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Quarters Ended Six Months Ended
<TABLE>
<CAPTION>
04/01/94 04/02/93 04/01/94 04/02/93
<S> <C> <C> <C> <C>
Net sales and operations $226,615,462 $216,051,088$456,015,284$430,618,118
Costs and expenses
Cost of sales 192,796,346 183,364,152387,992,138 367,855,388
Operating expenses 23,327,467 22,468,303 47,256,878 43,410,907
Selling and administrative
expenses 2,255,207 2,456,909 4,694,747 4,755,344
Depreciation and amortization 1,413,585 1,183,372 2,716,714 2,410,992
Interest:
Interest expense 2,231,965 2,148,753 4,362,330 4,328,908
Interest income ( 523,778) ( 605,311)(1,662,413) (1,919,740)
Interest expense, net 1,708,187 1,543,442 2,699,917 2,409,168
Total costs and expenses221,500,792211,016,178445,360,394 420,841,799
Net income before members'
allowances, patronage dividends
and income taxes 5,114,670 5,034,910 10,654,890 9,776,319
Members' allowances 3,474,703 3,123,684 7,021,062 5,759,123
Members' patronage dividends 900,000 1,159,169 2,200,000 2,559,169
Net income before income taxes 739,967 752,057 1,433,828 1,458,027
Provision for income taxes 231,100 231,079 476,500 500,000
Net income $ 508,867 $ 520,978$ 957,328 $ 958,027
</TABLE>
<PAGE>
UNITED GROCERS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
April 1 April 2
CASH FLOWS FROM OPERATING ACTIVITIES: 1994 1993
<S> <C> <C>
Net income $ 957,328 $ 958,027
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation and amortization 2,716,714 2,410,992
Provision for doubtful accounts 1,012,190 1,109,280
Patronage dividends payable in common stock 1,514,177 1,438,741
(Gain) loss on sale of assets 65,279 ( 483,310)
Decrease (increase) in non-cash current assets:
Accounts and notes receivable (7,635,622) (2,818,134)
Merchandise inventories 7,587,360 (6,722,765)
Other current assets (1,780,350) (1,175,298)
Increase (decrease) in non-cash current liabilities:
Accounts payable and insurance reserves (1,784,644) 1,921,839
Compensation and other taxes payable (241,807) 418,748
Other accrued expenses 2,603,532 1,922,845
Members' patronage and other refunds (5,784,927) (5,065,947)
Decrease (increase) in non-current other assets ( 495,791) ( 181,877)
Net cash provided by (used in) operating activities (1,266,561) (6,266,859)
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to members (14,199,135)( 4,021,908)
Collections on loans to members 8,184,508 4,755,915
Sale (buyback) of member loans ( 2,557,064) 613,295
Sale and redemption of investments 1,444,859 2,541,366
Purchase of investments (5,125,805)( 4,281,048)
Sale of property, plant and equipment 146,756 3,330,283
Purchase of property, plant and equipment (4,322,022) ( 4,718,776)
Net cash provided by (used in) investing activities(16,427,903) ( 1,780,873)
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 525,243 106,589
Repurchase of stock (1,856,201) (3,524,227)
Proceeds of long-term debt:
Revolving bank lines of credit 398,700,000 240,385,106
Mortgages and notes 700,579 1,055,986
Redeemable notes and certificates 8,740,300 12,609,000
Repayment of long-term debt:
Revolving bank lines of credit (385,071,328)(232,943,392)
Mortgages and notes (1,330,946) (1,339,411)
Redeemable notes and certificates (10,521,846) (8,182,909)
Net cash provided by (used in) financing activities 9,885,801 8,166,742
Net increase (decrease) in cash and cash equivalents(7,808,663) 119,010
Cash and cash equivalents, beginning of year 18,807,473 18,390,835
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 10,998,810$ 18,509,845
/TABLE
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Six months ended April 1, 1994 compared to six months ended April 2, 1993.
RESULTS OF OPERATIONS
OVERVIEW
In 1994, net sales and operations increased 5.9% to 456.0 million. This
compares to a 1.3% decline in 1993 to $429.4 million. Net income before
member allowances, patronage dividends, and income taxes increased 0.9 million
to $10.7 million (2.3% of sales). This compares to net income of $9.8 million
(2.3% of sales) in 1993.
During 1994, the increase in net sales and operations was due primarily to
higher unit volume in the distribution segment, and increased written premiums
in the insurance segment. Profitability improved due to these increases in
unit volume and improved loss ratios in the insurance segment, offset by
increases in member allowances and retail store losses.
NET SALES AND OPERATIONS
Warehouse and Cash & Carry distribution segment sales increased 5.5% to
$428.6 million. Warehouse sales increased 3.6 % reflecting higher unit
volume. Cash & Carry sales increased 14.5%, due to higher unit volumes (8.9%)
and sales at new units (5.6%).
Insurance segment's net premiums, commissions and fees increased 0.8% in
1994 to $10.3 million.
COSTS AND EXPENSES
In 1994, total costs and expenses increased $24.5 million to 445.4 million
(97.7% of sales). This compares to $420.8 million (97.7% of sales) in 1993.
The components of costs and expenses are outlined below:
Costs and Expenses as a Percent of Net Sales and Operations:
<TABLE>
<CAPTION>
For the six months ended:
4/1/94 4/2/93
<S> <C> <C>
Cost of Sales 85.1 85.5
Operating expenses 10.4 10.0
Selling and administrative expenses 1.1 1.1
Depreciation and amortization 0.6 0.6
Interest expense, net 0.5 0.5
Total 97.7 97.7
/TABLE
<PAGE>
Cost of sales as a percent of net sales and operations reduced to 85.0%
in 1994 from 85.5% in 1993 primarily due to improved loss ratios in the
insurance segment and a shift in distribution segment sales from grocery sales
to Cash & Carry sales and perishable department sales, offset by higher costs
on Cash & Carry and retail store sales.
Operating expenses as a percent of net sales and operations increased
0.4% to 10.4% in 1994 due to increased operating expenses in retail store
operations, and increased non-labor expenses in the distribution segment
resulting from higher unit volume. Operating expenses of approximately
$650,000 represent costs associated with the sale of two corporate stores and
the conversion of two additional stores to different store formats.
MEMBER ALLOWANCES AND PATRONAGE DIVIDENDS
In 1994, member allowances and patronage dividends were $9.2 million
(2.0% of sales). This compares to $8.3 million (1.9% of sales) in 1993. The
increase in member allowances and patronage dividends was due to increased
allowances paid under the Company's new "Partnership Incentive" program.
NET INCOME AND INCOME TAXES
Net income after member allowances, patronage dividends, and before
taxes was $1.4 million (0.3% of sales) in 1994 compared to $1.5 million (0.3%
of sales) in 1993. Net income after taxes was $1.0 million (0.2% of sales)
compared to $1.0 million (0.2% of sales) in 1993.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS FROM OPERATING ACTIVITIES
In 1994, the Company used $1.3 million in cash in its operations, a
decrease of $5.0 million in cash used compared to 1993. Merchandise
inventories decreased due to warehouse efficiencies.
At the beginning of the current fiscal year, the Company adopted FASB
#113 (Accounting for Reinsurance Contracts). The adoption of this change had
the effect of increasing accounts receivable by $2.4 million, other current
assets by $1.5 million, and accounts payable by $3.9 million.
CASH FLOWS FROM INVESTING ACTIVITIES
In 1994, the Company used $16.4 million in cash in investing
activities. This compares to the $1.8 million in cash used in investing
activities in 1993. The main components of the shift in the cash flow from
investing activities was the $10.2 million increase in loans to members,
decreases in the sale of insurance investments and property, plant and
equipment, and increased levels of capital expenditures.
CASH FLOWS FROM FINANCING ACTIVITIES
In 1994, the Company's financing activities provided $10.0 million in
cash compared to $8.2 million in 1993. Cash was primarily provided through
the utilization of the Company's bank credit lines.
<PAGE>
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders.
At the annual meeting of the shareholders on January 8, 1994, the
following directors were elected: David Neal, Peter O'Neal and Arthur
Thenell. The following directors will continue their terms of office:
Gilbert A. Foster, H. Larry Montgomery, Marlin Smythe, Craig Danielson, Dennis
Blasingame and James C. Vickers. The number of votes received by each nominee
for director was as follows: Pamela Garcia - 54, Ray Grady - 67,
Ken Martin - 68, David Neal - 89, Pete Nunn - 58, Peter O'Neal - 101, and
Arthur Thenell - 106.
Two amendments to the Company's Bylaws were voted upon. The first was
"Amend Article II Section 6 of the Bylaws and Article III of the Articles of
Incorporation to one vote for each retail store up to 5% of the total number
of shares entitled to vote." The vote for this proposed amendment was 103
for, 80 against and 2 abstaining. The amendment was defeated, lacking the
necessary 2/3 majority.
The second was "Amend Article II Section 3 of the Bylaws to allow two
consecutive 3-year terms on the Board of Directors." The vote for this
proposed amendment was 108 for, 72 against and 4 abstaining. The amendment
was defeated, lacking the necessary 2/3 majority.
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits to this report are listed on the attached Exhibit
Index.
(b) No reports on Form 8-K were filed during the quarter for which
this report is filed.<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 13, 1994 UNITED GROCERS, INC.
(Registrant)
By /s/ John W. White
John W. White
Vice President
(Principal Accounting Officer)
<PAGE>
Exhibit Index
No. Exhibit
10.A. Copy of Amendment 6 to credit agreement and amendment to
notes of July 31, 1991, among the registrant, United States
National Bank of Oregon, Seattle-First National Bank, and
Bank of America, National Trust and Savings Association,
dated as of October 29, 1993.
10.B. Copy of Amendment 7 to credit agreement and amendment to
notes of July 31, 1991, among the registrant, United States
National Bank of Oregon, Seattle-First National Bank, and
Bank of America, National Trust and Savings Association,
dated as of January 28, 1994.
10.C. Copy of asset purchase and sale agreement for Aloha and
Tigard stores dated January 3, 1994, with related documents,
between the registrant and CTD, L.L.C, an affiliate of
Craig Danielson, a director of the registrant.
10.D. Copy of sublease for Tigard store dated January 3, 1994,
between the registrant and CTD, L.L.C., an affiliate of
Craig Danielson, a director of the registrant.
10.E. Copy of sublease for Aloha store dated January 3, 1994,
between the registrant and CTD, L.L.C., an affiliate of
Craig Danielson, a director of the registrant.
<PAGE>
<PAGE>
AMENDMENT NUMBER SIX TO CREDIT AGREEMENT
AND AMENDMENT TO REVOLVING LINE NOTES AND OPERATING LINE NOTES
Background
This Amendment Number Six to Credit Agreement and Amendment to Revolving
Line Notes and Operating Line Notes ("Amendment") amends (a) the Credit
Agreement dated July 31, 1991, originally among United Grocers, Inc. as
Borrower, Seattle-First National Bank, United States National Bank of
Oregon, and Security Pacific Bank Oregon as Banks, and Seattle-First
National Bank as Agent, as previously amended by five amendments, the most
recent of which was dated May 28, 1993 (the original Credit Agreement as so
amended is hereafter referred to as the "Agreement"), and (b) those certain
"Revolving Line Notes" and "Operating Line Notes", as such terms are defined
in the Agreement and have been previously amended.
Capitalized terms used, but not defined, in this Amendment will have the
meaning given in the Agreement.
Agreements
For good consideration, receipt of which is hereby acknowledged by each of
the undersigned parties, the parties agree as follows:
1. Amendments to Agreement.
a.The definition of the terms "Total Commitments", "Total
Operating Line Commitment" and "Total Revolving Line Commitment" used in
the Agreement are hereby amended to reflect a temporary increase in the
total aggregate sum that United Grocers, Inc. may borrow under the
Revolving Line Notes and the Operating Line Notes up to $39,000,000.00 and
$26,000,000.00, respectively, for the period commencing on the date of
this Amendment and continuing until January 30, 1994 and subject to all of
the terms and conditions of the Agreement.
b.Section 4.01 of the Agreement is hereby amended to
reflect a temporary increase up to the following total aggregate sums that
each of the specified Revolving Line Banks is committed to advance to
United Grocers, Inc. under the Revolving Line Notes, as amended by this
Amendment, for the period commencing on the date of this Amendment and
continuing until January 30, 1994 and subject to all of the terms and
conditions of the Agreement:
Lender Aggregate Borrowings Permitted
Seafirst $16,250,000.00
U.S. Bank $16,250,000.00
B of A $ 6,500,000.00
c. Section 4.02 of the Agreement is hereby amended to
reflect a temporary increase up to the following total aggregate sums that
each of the specified Operating Line Banks is committed to advance to
United Grocers, Inc. under the Operating Line Notes, as amended by this
Amendment, for the period commencing on the date of this Amendment and
continuing until January 30, 1994 and subject to all of the terms and
conditions of the Agreement:
Lender Aggregate Borrowings Permitted
Seafirst $13,000,000.00
U.S. Bank $13,000,000.00
2. Amendment of Revolving Line Notes. Each of the Amended and
Restated Revolving Line Notes dated April 20, 1993 are hereby amended to
reflect a temporary increase in the total aggregate sum that United Grocers,
Inc. may borrow under each of the Amended and Restated Revolving Line Notes
executed in favor of the following specified lenders up to the amounts
specified below for the limited time period commencing on the date of this
Amendment and continuing until January 30, 1994 and subject to all of the
terms and conditions of the Agreement:
Lender Aggregate Borrowings Permitted
Seafirst $16,250,000.00
U.S. Bank $16,250,000.00
B of A $ 6,500,000.00
3. Amendment of Operating Line Notes. Each of the Amended and
Restated Operating Line Notes dated April 20, 1993 are hereby amended to
reflect a temporary increase in the total aggregate sum that United Grocers,
Inc. may borrow under each of the Amended and Restated Operating Line Notes
executed in favor of the following specified lenders up to the amounts
specified below for the limited time period commencing on the date of this
Amendment and continuing until January 30, 1994 and subject to all of the
terms and conditions of the Agreement:
Lender Aggregate Borrowings Permitted
Seafirst $13,000,000.00
U.S. Bank $13,000,000.00
4. Counterparts; Effect. This Amendment may be executed in multiple
counterparts, which when taken together shall be considered a single
original. Except as specifically amended by this Amendment or prior
amendments, all other terms, conditions, and definitions of the Agreement
and the Notes shall remain in full force and effect.
DATED as of the 29th day of October, 1993.
Borrower: Banks:
UNITED GROCERS, INC. SEATTLE-FIRST NATIONAL BANK,
as Bank and as Agent
By Alan C. Jones By
Title President Title
UNITED STATES NATIONAL BANK
OF OREGON
By John W. White By
Title Vice President Title
BANK OF AMERICA, NATIONAL
TRUST AND SAVINGS ASSOCIATION
By
Title
<PAGE>
<PAGE>
AMENDMENT NUMBER SEVEN TO CREDIT AGREEMENT
AND AMENDMENT TO REVOLVING LINE NOTES AND OPERATING LINE NOTES
Background
This Amendment Number Seven to Credit Agreement and Amendment to
Revolving Line Notes and Operating Line Notes ("Amendment") amends (a) the
Credit Agreement dated July 31, 1991, originally among United Grocers, Inc.
as Borrower, Seattle-First National Bank, United States National Bank of
Oregon, and Security Pacific Bank Oregon as Banks, and Seattle-First
National Bank as Agent, as previously amended by six amendments, the most
recent of which was dated October 29, 1993, and which is hereafter referred
to as the "Sixth Amendment" (the original Credit Agreement as so amended is
hereafter referred to as the "Agreement"), and (b) those certain "Revolving
Line Notes" and "Operating Line Notes", as such terms are defined in the
Agreements and have been previously amended.
Capitalized terms used, but not defined, in this Amendment will have the
meaning given in the Agreement.
Agreements
For good consideration, receipt of which is hereby acknowledged by each
of the undersigned parties, the parties agree as follows:
1. Amendments to Agreement.
a. Bank of America, National Trust and Savings Association
("Bank of America") shall no longer be a "Bank" or a "Revolving Line
Bank" under the Agreement.
b. The dollar amount increases made in Sections 1(a), 1(b),
1(c), 2, and 3 of the Sixth Amendment, which were to terminate on
January 30, 1994, are hereby extended to April 30, 1994, subject to all
of the terms and conditions of the Agreement.
c. To reflect the elimination of Bank of America as a
"Revolving Line Bank," and the redistribution of its credit commitment
to the remaining Banks, the chart in Section 4.01 of the Agreement, as
such section has been previously amended, is hereby amended to appear
as follows:
Lender Aggregate Borrowings Permitted
Seafirst $22,000,000.00
U.S. Bank $17,000,000.00
Total $39,000,000.00
2. Amendment of Revolving Line Notes. Each of the Amended and
Restated Revolving Line Notes dated April 20, 1993, other than that of Bank
of America, are hereby amended to reflect an increase in their respective
maximum dollar amounts to the following amounts:
Lender Maximum Note Amount
Seafirst $22,000,000.00
U.S. Bank $17,000,000.00
Total $39,000,000.00
Bank of American's Amended and Restated Revolving Line Note shall be marked
canceled or paid and sent to Agent for delivery to Borrower immediately
upon receipt by Bank of America of all principal and accrued interest
outstanding under said note, and all commitment fees, prepayment fees and
other fees and expenses due to Bank of America under the Loan Documents.
3. Release of Bank of America. Upon execution of this Amendment,
Bank of America shall have no further obligations to Borrower under the
Agreement.
4. Counterparts; Effect. This Amendment may be executed in multiple
counterparts, which when taken together shall be considered a single
original. Except as specifically amended by this Amendment or prior
amendments, all other terms, conditions, and definitions of the Agreement
and the Notes shall remain in full force and effect.
DATED as of the 28th day of January, 1994.
Borrower: Banks:
UNITED GROCERS, INC. SEATTLE-FIRST NATIONAL BANK,
as Bank and as Agent
By
Title
By Alan C. Jones By
Title President Title
UNITED STATES NATIONAL BANK
OF OREGON
By John W. White
Title Vice President
By
Title
The undersigned Bank acknowledges its approval of the above Amendment,
and agrees that upon receipt by the undersigned of payment in full of all
principal and accrued interest outstanding under its Amended and Restated
Revolving Line Note, and all commitment fees, prepayment fees and other
fees and expenses due to it under the Loan Documents, Borrower shall have
no further obligation to the undersigned under the Agreement or any of the
other Loan Documents.
Withdrawing Bank:
BANK OF AMERICA, NATIONAL
TRUST AND SAVINGS ASSOCIATION
By
Title<PAGE>
<PAGE>
ASSET PURCHASE AND SALE AGREEMENT
January 3, 1994
THIS ASSET PURCHASE AND SALE AGREEMENT ("Agreement") is between UNITED
RESOURCES, INC., an Oregon corporation, 6433 S.E. Lake Road, Portland,
Oregon 97222, CTD, L.L.C. an Oregon limited liability company, P.O. Box
5490, Oregon City, Oregon 97045 ("Purchaser") and UNITED GROCERS, INC., an
Oregon corporation, 6433 S.E. Lake Road, Portland, Oregon 97222 ("U.G.").
Seller owns and operates two grocery stores known as: Tigard Food
Connection located at 13500 S.W. Pacific Highway, Tigard, Washington
County, Oregon ("Tigard Store"); and Aloha Food Connection located at 20535
S.W. TV Highway, Aloha, Washington County, Oregon ("Aloha Store"). The
Tigard Store and the Aloha Store are referred to below as "the Stores."
The Tigard Store is located on premises ("Tigard Premises") leased from
Pension Funds, by Key Investments by lease dated September 8, 1987 ("Tigard
Real Estate Lease") to United Grocers, Inc. ("U.G.") and subleased to
Seller by Sublease dated June 1, 1988. The Aloha Store is located on
premises ("Aloha Premises") leased from Jim E. Hemstreet, Greg A. Hemstreet
and Linda D. Luck by lease dated May 26, 1987 ("Aloha Real Estate Lease")
to U.G. and subleased to Seller by Sublease dated June 1, 1988. Much of
the fixtures and equipment used by Seller in the operation of the Stores is
leased by Seller and U.G. from MetLife Capital, Limited Partnership
("MetLife") on a long term lease which includes other unrelated equipment
("Equipment Lease"). The Equipment Lease includes options to purchase the
fixtures and equipment at the end of the lease term or renewal terms. The
fixtures and equipment leased from MetLife and used at the Tigard Store are
listed on the attached Exhibit C and are referred to below as the "Tigard
Leased Equipment"; the fixtures and equipment leased from MetLife and used
at the Aloha Store are listed on the attached Exhibit D and are referred to
below as the "Aloha Leased Equipment." Seller wishes to sell all assets
used in the operation of the Stores, sublease the Tigard Premises and the
Aloha Premises to Purchaser and transfer Seller's interest in the leased
fixtures and equipment at the Stores to Purchaser, and Purchaser wishes to
purchase the assets and acquire the lease rights. U.G. is a party to this
Agreement solely to transfer its interest in the leased fixtures and
equipment to Purchaser and to enter into the representations, warranties
and covenants in this Agreement regarding the Equipment Lease, the Tigard
Leased Equipment and the Aloha Leased Equipment. In consideration of the
covenants contained in this Agreement the parties therefore agree as
follows:
1. Assets Purchased. Subject to the terms and conditions of this
Agreement Seller agrees to sell to Purchaser, and Purchaser agrees to
purchase, all assets used in the operation of the Stores including without
limitation the following:
1.1 Inventory. All merchantable inventory and supplies located in
the Stores on the date of closing but excluding all outdated or unsalable
items and excluding all seasonal (i.e., summer) items except those
Purchaser specifically elects to purchase ("the Inventory").
1.2 Tigard Equipment and Aloha Equipment. All fixtures, equipment,
leasehold improvements and other items listed on the attached Exhibit A
("the Tigard Equipment") and on the attached Exhibit B ("the Aloha
Equipment") together with any other items of fixtures or equipment owned by
Seller and used in the operation of the Stores which are not listed on the
attached exhibits.
1.3 Tigard Leased Equipment and Aloha Leased Equipment. The right to
possession and use of the Tigard Leased Equipment and the Aloha Leased
Equipment throughout the remainder of the term and a first renewal term of
the Equipment Lease together with free and clear title to the Tigard Leased
Equipment and the Aloha Leased Equipment as provided in paragraph 13.3
below.
1.4 Other Property. All other property of Seller, tangible or
intangible, which is reasonably necessary for, and used in, the operation
of the Tigard Store or the Aloha Store.
This sale excludes all cash and accounts receivable. Items in the Stores
which are owned by third party vendors shall be listed on the attached
Exhibit E with the name, address and telephone number of each third party
owner, with items listed separately for each store.
2. Price; Payment.
2.1 Inventory Price. The purchase price of the Inventory shall be
determined as follows but shall not exceed a total of $1,300,000:
2.1.1 For Inventory on the sales floor, in the back room and
overstock, an amount equal to retail value determined as provided in
paragraph 3 below, less the following percentages which shall include
margins, allowance and CE/PI rebates:
Grocery Items 19.5%
Meat 19.6%
Produce 36.0%
Service Deli 43.0%
Bulk Foods 36.0%
Bakery 55.0%
Beer and Wine 19.5%
Dairy 16.0%
General Merchandise/Health and Beauty 29.0%
Frozen Foods 25.0%
Videos $10 each
Grocery/Deli 19.5%
2.1.2 For supplies Seller's actual cost.
2.1.3 For deposit items Face value
2.1.4 For consigned items Seller's actual cost.
Seller shall pay to Purchaser all amounts claimed by consignors for
sales made prior to Purchaser's possession immediately on demand by
Purchaser.
2.1.5 For seasonal (i.e., summer) items which Purchaser agrees
to purchase, 50% of the price calculated subject to paragraph 2.1.1
above.
2.2 Tigard Equipment and Aloha Equipment Price. The purchase price
of the Tigard Equipment, the Aloha Equipment and any other items described
in paragraph 1.2 above shall be net book value of the items listed on
Exhibit A and Exhibit B as shown on Seller's books on the date of closing,
which is a total of $173,739.01.
2.3 Tigard Leased Equipment and Aloha Leased Equipment Price. The
purchase price of the Tigard Leased Equipment and the Aloha Leased
Equipment shall be payment by Purchaser to Seller of the regular periodic
payments due under the Equipment Lease for those items from the date of
closing through the end of the lease term and during the 24 month renewal
period described in paragraph 13.3.1 below, but excluding the final payment
due to lessor for purchase of the items. Those periodic payments are in
the amounts and terms set forth on the attached Exhibit F for a total price
of $889,152.15.
2.4 Payment. The portion of the purchase price described in
paragraphs 2.1 and 2.2 above shall be paid to Seller not later than 5 p.m.
on January 12, 1994. The portion of the purchase price described in
paragraph 2.3 above shall be paid to Seller in nine (9) payments of
$42,009.17 each, due on the 30th day of each month with the first payment
due on January 30, 1994 and continuing through September 30, 1994, then in
two (2) payments each in the amount of $22,374.58 due on October 30, 1994
and November 30, 1994, then in twenty-two (22) payments of $21,077.51 each
due on the 30th day of each month until September 30, 1996, and then two
(2) payments each in the amount of $1,307.62 due on October 30, 1996, and
November 30, 1996. The total portion of the purchase price described in
paragraph 2.3 above shall be paid in full on or before November 30, 1996.
3. Inventory Taking. Immediately prior to closing a physical inventory
and retail price valuation of the Inventory shall be done by a professional
inventory service mutually agreeable to the parties. Consigned items shall
be separately inventoried. The cost of the inventory shall be paid one-
half by Seller and one-half by Purchaser and each party may be present at
the inventory taking. The resulting inventory and valuation shall be final
and binding on the parties, and the parties shall execute a memorandum to
be attached to this agreement specifying the exact amount of Inventory
separately for each Store.
4. Closing.
4.1 Date and Location. This purchase and sale shall be closed at a
mutually agreeable location on a mutually agreeable date not later than
January 12, 1994.
4.2 Documents From Seller. Seller shall deliver to Purchaser at
closing the following documents, each in a form reasonably acceptable to
Purchaser and each duly executed, endorsed and acknowledged where
appropriate:
4.2.1 A warranty bill of sale transferring the Aloha Equipment,
Tigard Equipment and the Inventory to Purchaser free and clear of all
liens and encumbrances.
4.2.2 A true copy of the consent from MetLife which is required
by the terms of the Equipment Lease for this transaction.
4.2.3 All documents required to consent to the use of the names
Tigard Food Connection and Aloha Food Connection by Purchaser.
4.2.4 A complete list of all current suppliers at each store,
listed separately by store, including name, address, commodity supplied
and account number.
4.2.5 A true copy of the Tigard Real Estate Lease, the Aloha
Real Estate Lease and both subleases to Seller, including all addenda,
exhibits and amendments together with original, executed subleases to
Purchaser of each and any required consents by the landlords and U.G.,
all in form acceptable to Purchaser.
4.2.6 Copies of all service and maintenance contracts in effect
at the Stores on the date of closing, and originals of all warranties
which relate to assets purchased by Purchaser.
4.2.7 Such other documents or instruments as Purchaser may
reasonably require in the form necessary to vest title to the purchased
assets in Purchaser.
4.2.8 Keys to all entrance doors and keys and combinations to
all interior doors, safes and other locked areas, all appropriately
labeled.
4.3 Prorates. Personal property taxes and any other items agreed by
the parties shall be prorated between the parties as of the date Purchaser
takes possession of the Stores. Personal property taxes for the 1993-94
tax year shall be paid when due by Seller, and Purchaser shall reimburse
Seller for Purchaser's prorated share of such taxes at closing. Any
vending machines shall be emptied by Seller immediately prior to closing;
all funds collected on or after the date of closing shall belong to
Purchaser. Seller shall have utility meters read as of the date of closing
and Purchaser shall establish its own accounts for utilities.
4.4 Lien Creditors of Seller. All creditors of Seller with liens on
the Tigard Equipment, the Aloha Equipment or the Inventory shall be paid in
full at or before closing. Seller shall obtain and file releases of all
such liens at closing or immediately thereafter.
5. Possession. Purchaser shall have possession of all assets sold
pursuant to this Agreement and of the Tigard Premises and the Aloha
Premises and shall assume the risk of loss at 12:01 a.m. on January 4,
1994.
6. Liabilities.
6.1 Purchaser assumes no liabilities of Seller except as specifically
provided in this Agreement.
6.2 Purchaser shall assume all prepaid maintenance contracts in
effect at the Stores.
7. Merchandise in Transit. Inventory items ordered by Seller in the
usual course of business of the Stores which have not been received by the
date of closing shall be the property of Purchaser. Purchaser shall
reimburse Seller for any deposit or payment by Seller for such items upon
receipt of evidence of payment, and shall pay the balance to the supplier
directly upon receipt of invoice.
8. Accounts Receivable. Seller shall send any necessary notices of a
change of address to payors of its accounts receivable effective on the
date of closing. Purchaser shall have no obligation to collect Seller's
accounts receivable.
9. Employees.
9.1 List; Hiring by Purchaser. Not less than seven days prior to
closing Seller shall deliver to Purchaser a complete list of all employees
of Seller at the Stores, listed separately by Store, including name, date
of hire, job and pay rate. Purchaser shall be entitled to interview
employees for possible hiring by Purchaser. Purchaser shall be entitled
but not obligated to hire individual employees for work in this or other
locations if such employees make application.
9.2 Termination by Seller. Seller shall terminate the employment of
all employees in the Stores effective at the end of the last shift prior to
closing. Seller shall pay every employee all wages, salaries, accrued
vacation and all other amounts owed by Seller to the employees through the
date of termination promptly in accordance with applicable law.
10. Representations and Warranties of Seller. Seller makes the
following representations and warranties to Purchaser, each of which shall
be true at and survive the closing of this transaction:
10.1 Organization. Seller is duly incorporated and in good standing
under the laws of the State of Oregon and has full authority and legal
capacity to enter into and perform this Agreement and the documents and
instruments contemplated by this Agreement.
10.2 Capacity. The execution, delivery and performance of this
Agreement and the subleases and the transfer of possessory rights and
eventual title under the Equipment Lease have been duly authorized and
approved by the Board of Directors of Seller, no other authorization or
approval is required which has not been obtained, and this agreement and
the subleases constitute valid and binding agreements of Seller in
accordance with their terms.
10.3 Effect of Agreement. The execution and delivery of this
Agreement and of the subleases by Seller, and the consummation of the
transactions contemplated by those agreements, will not result in the
creation or imposition of any valid lien, charge or encumbrance on any of
the assets sold to Purchaser pursuant to this Agreement, and will not
require the authorization, consent or approval of any third party which has
not given its consent in writing prior to the date of closing.
10.4 No Brokers. Seller has not employed any broker or finder in
connection with the transactions contemplated by this Agreement and it has
taken no action which would give rise to a valid claim against any party
for a brokerage commission, finder's fee or other like payment.
10.5 Title. Seller has good and marketable title to the Tigard
Equipment, the Aloha Equipment and the Inventory, free and clear of
restrictions on or conditions to transfer or assignment and free and clear
as of the date of closing of all liens, pledges, charges or encumbrances.
10.6 Leases. Purchaser has been provided with true, accurate and
complete copies of the Tigard Real Estate Lease, Tigard sublease, the Aloha
Real Estate Lease, Aloha sublease and the Equipment Lease as amended to the
date of closing. Seller does not possess or use in the Stores any tangible
property owned by another person or entity except property included in the
Equipment Lease and property listed on the attached Exhibit E (third party
vendors).
10.7 Other Contracts. As of the date of closing there will be no
material leases, employment contracts, contracts for service or
maintenance, or other contracts existing or relating to or connected with
the operation of the Stores: (1) which are not cancelable within 30 days,
and (2) copies of which have not been given to Purchaser.
10.8 No Defaults. Seller has paid rent and all other amounts and
performed all other obligations due under the Tigard sublease, the Aloha
sublease and the Equipment Lease to the date of closing. Seller or its
assigns has paid all rent and all other amounts and performed all other
obligations due under the Tigard Real Estate Lease and the Aloha Real
Estate Lease to the date of closing. Each of those documents is currently
in effect and in good standing and neither Seller nor U.G. has any
knowledge of any claim of any material default or breach under any of those
documents.
10.9 No Litigation. Neither Seller nor U.G. has any knowledge of any
claim, litigation, proceeding or investigation pending or threatened
against Seller which might result in any material adverse change in the
business of the Stores or affect the Tigard Real Estate Lease, Aloha Real
Estate Lease, Equipment Lease or the assets sold to Purchaser pursuant to
this Agreement.
10.10 No Collective Bargaining; Employees. There are no collective
bargaining agreements covering the employees of Seller at the Stores. To
Seller's knowledge it has complied with all applicable laws, rules and
regulations related to employment including those related to wages, hours,
payment of state and federal payroll taxes and discrimination. Seller has
delivered to Purchaser true, accurate and complete information regarding
the compensation and benefits of all employees of Seller at the Stores.
10.11 Tax Returns. Seller has filed all required local, state and
federal tax returns and reports and has paid all local state and federal
taxes of any nature owing by Seller; and no proceedings are threatened or
pending to levy or assess Seller or any of its assets on account of tax
delinquencies or deficiencies.
10.12 Inventory. The Inventory includes only items which are
regularly sold by Seller in the ordinary course of its business at the
Stores, and the retail prices on the Inventory at the time of the physical
inventory described in paragraph 3 above will accurately reflect sales,
promotions, temporary price reductions, bonus savers and discounts which
would be affected by Seller in the ordinary course of its business absent
this transaction.
10.13 Asset Locations. All of the items listed on Exhibits A, B, C
and D will be physically located in the Stores on the date of closing.
10.14 Condition of Equipment. All items included in the Tigard
Leased Equipment, Aloha Leased Equipment, Tigard Equipment and Aloha
Equipment are in working order and repair on the date of closing.
10.15 Other Information. None of the representations or warranties
of Seller or U.G., and none of the information or documents provided or to
be provided by Seller or U.G. to Purchaser contain or will contain any
untrue statement of a material fact or omit or will omit or misstate a
material fact necessary in order to make the statements contained in this
Agreement or the information or documents not misleading. Seller and U.G.
know of no fact which has resulted, or which, in the reasonable judgment of
the officers of Seller signing this Agreement, will result in a material
change in the operations of the Stores or in the assets sold to Purchaser
pursuant to this Agreement which has not been set forth in this Agreement
or otherwise disclosed to Purchaser in writing.
11. Covenants of Seller and U.G..
11.1 Operation Prior to Closing. Prior to closing and until
possession of the Stores are delivered to Purchaser, Seller shall operate
the Stores in the usual manner, keep them both open for business during the
same days and hours as in the past, and maintain the Inventory and the
personnel at the usual level for each Store.
11.2 Indemnification.
11.2.1 Seller will indemnify and defend Purchaser and hold
Purchaser harmless from any claim, loss, liability or expense in
connection with: the breach of any of Seller's covenants or
representations and warranties contained in this Agreement; or the
failure by Seller to make all payments and perform all other terms and
conditions of the Equipment Lease, the Tigard sublease or the Aloha
sublease promptly in accordance with their terms; or the failure by
Seller and/or U.G. to promptly obtain and transfer to Purchaser free and
clear title to the Tigard Leased Equipment and the Aloha Leased Equipment
in accordance with the terms of paragraph 13.3 below.
11.2.2 U.G. will indemnify and defend Purchaser and hold Purchaser
harmless from any claim, loss, liability or expense in connection with:
the breach of any of U.G.'s covenants or representations and warranties
contained in this Agreement; or the failure by U.G. to make all payments
and perform all other terms and conditions of the Equipment Lease, the
Tigard Real Estate Lease or the Aloha Real Estate Lease promptly in
accordance with their terms; or the failure by U.G. and/or Seller to
promptly obtain and transfer to Purchaser free and clear title to the
Tigard Leased Equipment and the Aloha Leased Equipment in accordance with
the terms of paragraph 13.3 below.
11.3 No Equipment Lease Amendments. So long as the Tigard Leased
Equipment or the Aloha Leased Equipment is subject to the Equipment Lease
Seller and U.G. shall not amend the Equipment Lease in any manner which
would affect Purchaser, Purchaser's right to the use and possession of such
assets or Purchaser's right to receive free and clear title to such assets
at the time specified in paragraph 13.3.
11.4 Payment of Amounts Due Under Equipment Lease. Seller and U.G.
shall make all payments due under the Equipment Lease promptly in
accordance with its terms and shall promptly perform all other terms and
conditions of the Equipment Lease to be performed by Seller and U.G.
12. Conditions Precedent. Purchaser's obligations under this
Agreement are subject to each of the following conditions precedent:
12.1 OLCC. Purchaser obtaining package liquor licenses from the
Oregon Liquor Control Commission for both Store locations. Purchaser shall
apply promptly and pursue the license approvals diligently.
12.2 Subleases. Execution and delivery of a sublease of the Tigard
Premises and a sublease of the Aloha Premises to Purchaser on terms and
conditions satisfactory to Purchaser and any required consent of U.G. and
the lessors to such subleases.
12.3 Equipment Lease Consent. Seller and U.G. obtaining any consent
from the lessor under the Equipment Lease which that document requires for
the closing of this transaction.
12.4 Food Stamps. Purchaser obtaining authorization from the U.S.
Department of Agriculture to accept food stamps at both Store locations.
12.5 W.I.C. Purchaser obtaining authorization to accept W.I.C.
coupons at both Store locations.
12.6 Membership. Purchaser obtaining membership in United Grocers,
Inc. and in the Thriftway group for both Stores.
12.7 Financing. Purchaser obtaining financing for the purchases
contemplated by this Agreement on terms acceptable to Purchaser.
12.8 Thriftway Agreement. Purchaser obtaining an agreement with the
Thriftway group which shall provide that for a period of six (6) months or
twenty-six (26) weeks beginning with the first ad Purchaser participates
in, Purchaser's Thriftway membership for the Stores shall be free of the
Thriftway assessments for each Store while earning all case, product and
other allowances, rebates, accruals, distributions and other incentives
including without limitation new product and new store allowances.
13. Equipment Lease and Other Liabilities of Seller.
13.1 Other Liabilities. Except for the obligations described in
paragraph 13.2 below, Seller shall pay all obligations incurred by Seller
in connection with the Stores in full within ten days after the date of
closing and shall obtain the release of record of any lien on assets
purchased by Purchaser, at or before closing. Seller shall in any event
indemnify and defend Purchaser and hold Purchaser harmless from any claim,
cost, liability or expense, including costs and attorney's fees, incurred
by Purchaser in connection with obligations of Seller which are not
expressly assumed by Purchaser under the provisions of this Agreement.
13.2 Equipment Lease. Commencing at closing Purchaser shall make
periodic payments to Seller in the amounts and at the times specified in
paragraph 2.4 above. Commencing at closing Purchaser shall also pay
property taxes, procure and maintain physical damage, bodily injury and
property damage insurance, and keep the Tigard Leased Equipment and the
Aloha Leased Equipment in good repair as required by the Equipment Lease.
Seller and U.G. shall make all payments to the lessor and perform all other
obligations promptly when due under the Equipment Lease. Seller and U.G.
shall use their best efforts to obtain an amendment to the Equipment Lease
granting to Purchaser the right to retain use and possession of the Tigard
Leased Equipment and the Aloha Leased Equipment, and to all purchase rights
for such equipment, so long as Purchaser makes the payments described in
paragraph 2.4 above when due and regardless of any default by Seller and
U.G. under the Equipment Lease. Whether or not such an amendment is
obtained, upon written demand from the lessor under the Equipment Lease
Purchaser may make such payments directly to the lessor and such payments
shall be credited as if paid to Seller.
13.3 Option to Purchase Under Equipment Lease.
13.3.1 At the end of the lease term of the Equipment Lease
Seller and U.G. shall exercise the first renewal option for a renewal
period of 24 months. Seller and U.G. shall deliver the appropriate
notice to the lessor under the Equipment Lease not less than 60 days
prior to the end of the lease term, as required by that document.
Purchaser shall make payments to Seller during the renewal term as
provided in paragraph 2.3 above and Seller and UG shall make all rent
payments due under the Equipment Lease as provided in paragraph 13.2
above. At the end of the first renewal period Seller and UG shall
exercise the option to purchase the Tigard Leased Equipment and the Aloha
Leased Equipment and shall deliver the appropriate notice to the lessor
under the Equipment Lease not less than 60 days prior to the end of the
renewal term. Seller and UG shall pay the amount due to the lessor for
the purchase and shall promptly acquire title to the Tigard Leased
Equipment and the Aloha Leased Equipment. Immediately thereafter Seller
and U.G. shall convey free and clear title in the Tigard Leased Equipment
and the Aloha Leased Equipment to Purchaser subject to no liens,
restrictions or encumbrances except the lien of any then current personal
property taxes not yet payable.
13.3.2 Notwithstanding the provisions of paragraph 13.3.1, if
the Stores experience an average annual return on investment during the
first 36 months of operation by Purchaser which is greater than 20
percent, Purchaser shall pay a share of the amount due to the lessor for
any purchase. Purchaser's share shall be the lesser of one-half of the
amount due or $175,000. "Average return on investment" shall be
calculated by dividing the average annual net income for the 36 month
period by the total of the purchase prices specified in paragraphs 2.1,
and 2.2. "Average annual net income" shall mean the net income from the
Stores over the 36 month period, computed on the income tax basis of
accounting and before allocation of administrative overhead, divided by
three.
14. Remedies. Upon any breach or default of this Agreement by a
party, the other party may exercise separately or in combination, serially
or cumulatively, all of the remedies available at law for such breach or
default, except as specifically limited by other terms of this Agreement.
15. Survival. All representations, warranties and covenants of this
Agreement shall survive the closing of the sale and purchase. The
obligations of each party under this Agreement which require performance or
impose restrictions after the closing will survive the closing and continue
to be binding on that party and insure to the benefit of the other
party(s).
16. General Provisions.
16.1 Attorney's Fees. If any party institutes suit or action to
enforce or interpret the terms of this Agreement the prevailing party shall
be entitled to recover from the losing party(s) all costs and disbursements
incurred by it in that connection plus such sum as the court may adjudge
reasonable for attorney's fees in the trial court and in any appellate
court.
16.2 Notices. Any notice given pursuant to this Agreement shall be
in writing and effective at the earlier of actual receipt or three days
after deposit in the U.S. mails as certified mail, postage prepaid,
addressed to a party at the address stated on page 1 above or at such other
address as the party may specify by notice to the other party.
16.3 Legal Representation. Each party has been represented by
counsel in the negotiation and preparation of this Agreement.
16.4 Section Headings. The section headings in this Agreement are
for convenience only and shall not be construed to vary any of the terms of
this Agreement.
16.5 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns.
16.6 Severability. If any term of this Agreement is deemed to be
illegal or unenforceable at law it shall be deemed to be void and of no
force and effect to the extent necessary to bring such term within the
provisions of the applicable law, and such term as so modified together
with all other terms of this Agreement shall be and remain fully
enforceable.
16.7 Waiver. No waiver of any term or provision of this Agreement
shall be binding unless it is in writing and signed by the party making the
waiver. No waiver of one term or provision shall be deemed to be a waiver
of any other term or provision or to be a continuing waiver.
SELLER: UNITED RESOURCES, INC.
By Alan C. Jones
Its Vice President
PURCHASER: CTD, L.L.C.
By Carol Suzuki
Its Manager
U.G. UNITED GROCERS, INC.
By Alan C. Jones
Its President
<PAGE>
BILL OF SALE
UNITED RESOURCES, INC., an Oregon corporation ("Seller"), hereby grants,
bargains, sells, transfers and delivers to CTD, L.L.C., an Oregon limited
liability company ("Purchaser"), the following described property:
1. All merchantable inventory and supplies located in the Aloha Food
Connection store at 20535 S.W. TV Highway, Aloha, Oregon at 12:01 a.m. on
January 4, 1994, together with
2. All fixtures, equipment, leasehold improvements and other items
owned by Seller and used in the operation of the store including without
limitation the items listed on the attached Exhibit A.
Seller warrants to Purchaser that Seller has good and marketable title to
the above described property subject to no liens or encumbrances and that
it will defend this conveyance against the claims of all others.
The consideration for this Bill of Sale is the sum of $582,853.
DATED: January 4, 1994.
UNITED RESOURCES, INC.
By Alan C. Jones
Its Vice President
STATE OF OREGON )
) ss. January 12, 1994
County of Clackamas )
Personally appeared Alan C. Jones, who being duly sworn did say that he
is the Vice President of UNITED RESOURCES, INC., and that said instrument
was signed in behalf of said corporation by authority of its board of
directors; and he acknowledged said instrument to be its voluntary act and
deed.
Before me: Beverly B. McPherson
Notary Public for Oregon
My commission expires: 7-20-96
<PAGE>
BILL OF SALE
UNITED RESOURCES, INC., an Oregon corporation ("Seller"), hereby grants,
bargains, sells, transfers and delivers to CTD, L.L.C., an Oregon limited
liability company ("Purchaser"), the following described property:
1. All merchantable inventory and supplies located in the Tigard
Food Connection store at 13500 S.W. Pacific Highway, Tigard, Oregon at
12:01 a.m. on January 4, 1994, together with
2. All fixtures, equipment, leasehold improvements and other items
owned by Seller and used in the operation of the store including without
limitation the items listed on the attached Exhibit A.
Seller warrants to Purchaser that Seller has good and marketable title to
the above described property subject to no liens or encumbrances and that
it will defend this conveyance against the claims of all others.
The consideration for this Bill of Sale is the sum of $595,984.
DATED: January 4, 1994.
UNITED RESOURCES, INC.
By Alan C. Jones
Its Vice President
STATE OF OREGON )
) ss. January 12, 1994
County of Clackamas )
Personally appeared Alan C. Jones, who being duly sworn did say that he
is the Vice President of UNITED RESOURCES, INC., and that said instrument
was signed in behalf of said corporation by authority of its board of
directors; and he acknowledged said instrument to be its voluntary act and
deed.
Before me: Beverly B. McPherson
Notary Public for Oregon
My commission expires: 7-20-96
<PAGE>
STORE REMODEL AGREEMENT
This Store Remodel Agreement is between UNITED GROCERS, INC., an Oregon
corporation, 6433 S.E. Lake Road, Portland, Oregon 97222 ("U.G.") and CTD,
L.L.C. an Oregon limited liability company, P. O. Box 5490, Oregon City,
Oregon 97045 ("Operator").
Operator has agreed to purchase certain assets used in connection with
the operation of two supermarket stores: Tigard Food Connection at 13500
S.W. Pacific Highway, Tigard, Washington County, Oregon; and Aloha Food
Connection at 20531 S.W. TV Highway, Aloha, Washington County, Oregon ("the
Stores") from United Resources, Inc., a subsidiary of U.G. The Stores are
currently operated as Food Connection stores. Operator plans to remodel
the Stores and convert them to Thriftway stores, and Operator's agreement
to purchase is subject to a condition that the Stores be accepted as
members of the Thriftway group (among other conditions). Operator cannot
convert the Stores to Thriftway stores unless the necessary remodeling can
be accomplished for a limited cost.
In consideration of Operator's agreement to buy the assets and also in
consideration of the covenants below, the parties therefore agree as
follows:
1. Fixed Bid. U.G. shall, through its engineering department, agree to
remodel both Stores to meet Thriftway Marketplace guidelines in accordance
with the attached Exhibit A for a total fixed price of $640,000 or less.
U.G. shall confirm the actual fixed price by delivery of a written fixed
bid to Operator no later than ____________________.
2. Interest Free Project Account. No interest shall be accrued or
charged to Operator on the project account for the remodeling project until
30 days after the billing for the total project has been submitted to
Operator by U.G.
3. Miscellaneous.
3.1 Attorney's Fees. If either party institutes suit or action to
enforce or interpret the terms of this Agreement the prevailing party shall
be entitled to recover from the other party all costs and disbursements
incurred by it in that connection plus such sum as the court may adjudge
reasonable for attorney's fees in the trial court and in any appellate
court.
3.2 Notices. Any notice given pursuant to this Agreement shall be
in writing and effective at the earlier of actual receipt or three days
after deposit in the U.S. mails as certified mail, postage prepaid,
addressed to a party at the address stated on page 1 above or at such other
address as the party may specify by notice to the other party.
DATED: , 1994.
U.G. UNITED GROCERS, INC.
By
Its
OPERATOR: CTD, L.L.C.
By
Its
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AGREEMENT
CTD, L.L.C., an Oregon limited liability company ("CTD") is purchasing
the assets of the Tigard Food Connection store and the Aloha Food
Connection store ("the Stores") from UNITED GROCERS, INC., an Oregon
corporation ("United") by Asset Purchase and Sale Agreement dated
January ____, 1994. The purchase is subject to CTD receiving certain
promises and agreements from THRIFTWAY STORES, INC., an Oregon corporation
("Thriftway") regarding advertising costs and rebates.
In consideration of CTD's purchase of the two stores, the parties agree
as follows:
1. Aloha Food Connection Advertising Costs. From the date of the
purchase of the Aloha store by CTD until the earlier of June 21, 1994 or
the date of conversion to a Thriftway store the Food Connection advertising
assessment/membership fee for the Aloha store shall be no greater than the
sum of $1,500 per week. The store shall earn and be paid all credits,
rebates and allowances during that period.
2. Tigard Food Connection Advertising Costs. The Food Connection
advertising assessment/membership fee for the Tigard store shall be the
normal amount and no greater than $2,900 a week. The store shall earn and
be paid all credits, rebates and allowances.
3. Thriftway Advertising Assessments After Conversion. For six months
following the date of a conversion of each of the Stores to a Thriftway
store the converted store shall not be charged any Thriftway advertising
assessments but each store shall earn and be paid all credits, rebates and
allowances to which it would normally be entitled.
4. Thriftway Not a Party. In the event and to the extent that
Thriftway does not honor this agreement United shall pay such sums to CTD
monthly as are required to put CTD in the position contemplated by the
terms of this agreement.
5. Attorney's Fees. If either party institutes suit or action to
interpret or enforce the terms of this agreement, the prevailing party
shall be entitled to recover from the other party all costs and
disbursements incurred by it in that connection plus such sum as the court
may adjudge reasonable for attorney's fees in the trial court and in any
appellate court.
DATED: January 3, 1994.
CTD: CTD, L.L.C.
By Carol Suzuki
Its Manager
UNITED: UNITED GROCERS, INC.
By Alan C. Jones
Its President
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SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT is entered into this 3rd day of January, 1994, by
and between UNITED RESOURCES, INC., an Oregon corporation, hereinafter
designated as Sublessor, and CTD, L.L.C., an Oregon limited liability
company, hereinafter designated as Sublessee. UNITED GROCERS, INC., an
Oregon corporation, hereinafter designated as United, enters into this
Sublease solely for purposes of binding itself to the covenants contained
in paragraphs 4, 5.1, 10.1, 10.2 and 10.3 below.
W I T N E S S E T H:
WHEREAS, United has entered into a Lease Agreement dated September 8,
1987, with TIGARD EAST ASSOCIATES, a joint venture, a copy of which is
attached hereto and marked Exhibit "A" ("the Prime Lease" or "Exhibit A"),
and by this reference incorporated herein, as if its terms and conditions
were herein set forth, for a supermarket located in the Tigard Market Place
in Tigard, Oregon, commencing on the date described in the Prime Lease.
Pension Funds is now the holder of the lessor's interest in the Prime
Lease.
WHEREAS, United has subleased the premises to Sublessor by Sublease dated
June 1, 1988.
WHEREAS, Sublessee desires to sublet said premises for a period of
approximately nineteen (19) years with certain renewal rights as provided
in the Prime Lease and Sublessor is willing to so sublet in accordance with
the terms and conditions hereinafter set forth; now, therefore,
IT IS HEREBY AGREED as follows:
1. Term. Sublessor hereby sublets unto Sublessee those premises
described in said Exhibit A, for the remainder of the Prime Lease, which is
approximately nineteen (19) years, commencing on January 3, 1994.
1.1 The Sublessee, so long as it is not in default hereunder, shall
be granted the right to exercise any and all renewal options contained in
Exhibit A, upon the condition that Sublessee is not in default of this
Sublease.
2. Rent. Sublessee covenants and agrees to pay for the whole of said
term the same rental, together with all affirmative covenants including,
without limitation, those pertaining to basic rent, percentage of gross
sales, taxes, assessments, insurance and all of the covenants and
obligations to be performed by Lessee, as set forth in said Exhibit A, and
to make such payments and provide such performance when due by the terms of
the Prime Lease and any amendments thereto.
3. Deposits. Sublessee shall, upon execution hereof, pay any and all
rental or security deposits, as required pursuant to the terms and
conditions of said Exhibit A.
4. Prime Lease. Sublessee shall be bound by and have the benefit of
the same responsibilities, rights, privileges and duties of United, as
enumerated in Exhibit A, except for United's rights under Paragraph 47,
Page 33, which are expressly retained by United, and covenants and agrees
to fully indemnify and hold Sublessor and United harmless from any and all
responsibility and/or liability which Sublessor or United may incur by
virtue of said Exhibit A, and/or Sublessee's occupancy of the premises
during the term and any renewals of this Sublease. Furthermore, Sublessee
shall be bound by any subsequent amendment, revision, supplement or
addition to the Prime Lease but neither Sublessor nor United shall enter
into any subsequent amendment, revision, supplement or addition to the
Prime Lease without the prior written consent of Sublessee, which consent
shall not be unreasonably withheld.
5. Default. The following shall constitute a default under this
Sublease:
5.1 Any failure by Sublessee to pay when due rent or any other
amount due under the Prime Lease, or to perform when due any other
obligation of United under the Prime Lease, or any other default under the
Prime Lease which continues for up to 70 percent of the cure period
provided with respect thereto in the Prime Lease; Sublessor and United
covenant and agree that upon receipt from Lessor of any notice of default
or alleged defaults to promptly supply Sublessee with a copy of said
notice;
5.2 Any failure by Sublessee to perform when due any other
obligations of Sublessee hereunder within thirty (30) days after written
notice of said default except that if the failure can reasonably be
corrected within 30 days the Sublessee shall not be in default if Sublessee
promptly begins to correct the failure and continues to pursue such
correction to completion;
5.3 If any warranty, representation or statement made or furnished
to Sublessor by or on behalf of the Sublessee is false in any material
respect when made or furnished;
5.4 Any failure by Sublessee to pay and/or satisfy within twenty
(20) days after written notice to Sublessee specifying the failure with
reasonable particularity, any present or hereafter incurred indebtedness or
obligation of Sublessee to United or Sublessor with respect to the retail
operation upon the premises which exceeds $75,000 and arises from
Sublessor's or United's extensions of credit to Sublessee;
5.5 Sublessee vacates, abandons or fails continuously to occupy and
to conduct its business on the leased premises, except as caused by a
strike, remodeling first approved by Sublessor, Act of God, or other cause
beyond the reasonable control of Sublessee; Sublessor shall respond within
fifteen (15) working days to any notice from Sublessee requesting consent
to remodeling, which shall not be unreasonably withheld, or Sublessor shall
be deemed to have consented;
5.6 Sublessee makes a general assignment for the benefit of
creditors; admits in writing its inability to pay its debts as they become
due; files a petition in bankruptcy; is adjudicated a bankrupt or
insolvent; files a petition seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief
under any present or future statute, law or regulation; fails timely to
contest the material allegations of a petition filed against it in any
bankruptcy proceeding, or seeks, consents to or acquiesces in the
appointment of any trustee, receiver or liquidator of Sublessee or any
material part of its properties.
6. Remedies. In the event of any default under this Sublease:
6.1 Sublessor shall have the right, at its election, upon notice to
Sublessee, to terminate this Sublease or to terminate Sublessee's right of
possession in the premises without terminating this Sublease;
6.2 Sublessor shall have the immediate right, whether or not the
Sublease shall have been terminated pursuant to Paragraph 6.1, to re-enter
and repossess the premises or any part thereof by force, summary
proceedings, ejectment or any other legal or equitable process, all without
any liability on Sublessor's part for such entry, repossession or removal;
6.3 Sublessor may, whether or not this Sublease shall have been
terminated pursuant to Paragraph 6.1, resublet the premises, or any part
thereof, in the name of Sublessee, Sublessor or otherwise, without notice
to Sublessee, for such term or terms and for such uses as Sublessor, in its
reasonable discretion, may determine and may collect and receive rents
payable by reason of such resubletting (without any liability for any
failure to collect such rents). Notwithstanding the foregoing, the
Sublessor shall be subject to such common law duties of mitigation of
damages, if any, as are imposed upon the lessor under the Prime Lease;
6.4 Sublessor may (but shall be under no obligation to) procure any
insurance, pay any rentals, taxes or liens, make any repairs, pay any sums
required to be paid, and to do and perform such other acts as may be
required of Sublessee hereunder, and any payments so made shall bear
interest at the rate of 12 percent per annum from the time of such payment
until repaid; and
6.5 Sublessor may exercise any and all other rights and remedies
afforded to the lessor under the Prime Lease upon default under the Prime
Lease and any and all other rights and remedies Sublessor may have pursuant
to the laws of the State of Oregon. In addition to the other remedies
provided above, Sublessor shall be entitled to current damages and final
damages as provided in Paragraph 7 below, and, to the extent permitted by
applicable law, to injunctive relief in case of the violation, or attempted
or threatened violation, of any of the provisions of this Sublease, or to a
decree compelling performance of this Sublease. Notwithstanding the above,
Sublessor shall not be entitled to double damages.
6.6 No expiration or termination of this Sublease, repossession of
the premises or any part thereof, or resubletting to the above paragraph or
by operation of law or otherwise, shall relieve Sublessee of its
liabilities and obligations under this Sublease, all of which shall survive
such expiration, termination, repossession or resubletting.
7. Damages.
7.1 Current Damages. In the event of any expiration or termination
of this Sublease or repossession of the premises or any part thereof by
reason of the occurrence of any event of default, Sublessee will pay to
Sublessor the rent and other sums required to be paid by Sublessee for the
period to and including the date of such expiration, termination or
repossession; and thereafter, until the end of what would have been the
term in the absence of such expiration, termination or repossession, and
whether or not the premises or any part thereof shall have been resublet,
Sublessee shall be liable to Sublessor for, and shall pay to Sublessor, as
liquidated and agreed current damages the rent and other sums which would
be payable under this Sublease by Sublessee in the absence of such
expiration, termination or repossession, less the net proceeds, if any of
any resubletting effected for the account of the Sublessee, after deducting
from such proceeds all of Sublessor's expenses reasonably incurred in
connection with such resubletting (including, without limitation, all
repossession costs, brokerage commissions, legal expenses, attorney's fees,
alteration costs and expenses of preparation for such resubletting).
Sublessee will pay such current damages on the days on which rent would
have been payable under this Sublease in the absence of such expiration,
termination or repossession, and Sublessor shall be entitled to recover the
same from Sublessee on each such day.
7.2 Final Damages. At any time after any such expiration or
termination of this Sublease or repossession of the premises or any part
thereof by reason of the occurrence of any event of default, whether or not
Sublessor shall have collected any current damages pursuant to Paragraph
7.1, Sublessor shall be entitled to recover from Sublessee, and Sublessee
will pay to Sublessor on demand, as and for liquidated and agreed final
damages for Sublessee's default and in lieu of all current damages beyond
the date of such demand (it being agreed that it would be impracticable or
extremely difficult to fix the actual damages), an amount equal to the
excess, if any of (a) the rent and other sums which would be payable under
this Sublease from the date of such demand (or, if it be earlier, the date
to which Sublessee shall have satisfied in full its obligations under
Paragraph 7.1 to pay current damages) for what would be the then unexpired
term in the absence of such expiration, termination or repossession,
discounted to present value at an assumed interest rate of ten percent
(10%) per annum, over (b) the then net rental value of the premises
discounted to present value at an assumed interest rate of ten percent
(10%) per annum for the same period. Rental value shall be established by
reference to the terms and conditions upon which Sublessor resublets the
premises if such resubletting is accomplished within a reasonable period of
time after such expiration, termination or repossession, and otherwise
established on the basis of Sublessor's estimates and assumptions of fact
regarding market and other relevant circumstances, which shall govern
unless shown to be erroneous. If any statute or rule of law shall validly
limit the amount of such liquidated final damages to less than the amount
above agreed upon, Sublessor shall be entitled to the maximum amount
allowable under such statute or rule of law.
8. Rights Cumulative, Nonwaiver. No right or remedy herein conferred
upon or reserved to Sublessor is intended to be exclusive of any other
right or remedy, and each and every right and remedy shall be cumulative
and in addition to any other right or remedy given hereunder or now or
hereafter existing at law or in equity or by statute. The failure of
Sublessor to insist at any time upon the strict performance of any covenant
or agreement or to exercise any option, right, power or remedy contained in
this Sublease shall not be construed as a waiver or relinquishment thereof
for the future. No waiver by Sublessor of any provision of this Sublease
shall be deemed to have been made whether due to receipt of rent or
otherwise, unless expressed in writing and signed by Sublessor.
9. Assignment and Subletting. Sublessee acknowledges that provisions
for assignment and subletting in the Prime Lease are applicable to the
lessor under the Prime Lease and Sublessor only. Except as provided below
Sublessee will not assign this Sublease or sublet in excess of 6,000 square
feet of the premises without the prior written consent of Sublessor, which
consent shall not be unreasonably withheld. A transfer of ownership of a
majority interest in Sublessee, by whatever procedure, shall be deemed an
assignment of this Sublease for the purposes of this paragraph except that
transfers by sale, gift, exchange or as a result of the death of a member
to the spouses and/or children of a member or transfers to a corporation,
partnership, estate, trust or other entity which is controlled by member(s)
of Sublessee and/or their spouses or children or transfers between existing
members shall not be deemed to be an assignment of this Sublease. For
purposes of this paragraph the members who hold ownership of Sublessee are
Craig T Danielson and Carol D. Suzuki.
10. Covenants, Representations and Warranties.
10.1 Membership in United. Sublessee agrees to maintain or cause
to be maintained the membership of the store in good standing with United
except in the following circumstances:
(a) Upon payment to United of $100,000 at any time prior to
the fifth annual anniversary of the commencement date specified in
Paragraph 1 above, or
(b) At any time after a change from the identity of the
President or Chief Executive Officer of United from the holder of those
offices on the date of this Sublease, or
(c) At any time after United consummates a reorganization.
The term "reorganization" shall mean a merger or consolidation with another
entity; dissolution; transfer of any significant portion of the assets of
United to another entity whether newly formed or not; sale or exchange or
other transfer of more than 49 percent of the outstanding shares of
membership in United to another person or entity; or the acquisition by
United of more than 49 percent of the outstanding shares or other evidences
of ownership or membership in any other entity; or
(d) At any time which is after the fifth annual anniversary of
the commencement dated specified in Paragraph 1 above.
10.2 Purchase from United.
(a) Sublessee agrees that throughout the term of the Sublease
and any extensions or renewals thereof (except as hereinafter provided),
and so long as Sublessee has not terminated its membership of the store
with United in accordance with the provisions of Paragraph 10.1 above, and
subject to the provisions of Paragraphs (b) and (c) below, Sublessee will
purchase from United not less than sixty-four percent (64%) of its total
wholesale purchases on a monthly basis, of all goods and merchandise
purchased for resale on the premises to the extent that United shall now or
thereafter be able to supply such goods and merchandise to the Sublessee,
and United will supply all of Sublessee's requirements at such prices and
on such terms at least equal to the most favorable prices and terms offered
by United to other purchasers from United. Effective on the date of a
termination of the store's membership in United pursuant to the provisions
of Paragraph 10.1 above, this Paragraph 10.2 shall terminate and Sublessee
shall have no further obligation to purchase from United.
(b) The following items purchased by Sublessee shall be
excluded from total wholesale purchases for purposes of calculating the 64
percent requirement:
(1) Items for which United is out of stock or which are
not stocked by United.
(2) Items purchased elsewhere by Sublessee for 90 percent
or less of United's book price on the date of order by Sublessee.
(3) Items purchased in order to meet a minimum required
order amount if the order is placed due to circumstances described in the
other sections of this Subparagraph (b).
(4) Items purchased directly from a pharmacy or hardware
wholesaler such as McKesson or Cotter & Co.
(5) Drop shipments, relays and specialized meat items.
(c) If, at any time, Sublessee contends that United is not
able to supply particular goods or merchandise customarily stocked by
retail supermarkets in Portland, Oregon, or that terms offered by United to
Sublessee are not at least equal to those offered by United to other
purchasers as described above, Sublessee shall so advise United in writing,
specifying such contention with particularity. If, within thirty (30) days
after receipt of such notice, United does not offer by written notice to
supply goods or merchandise so specified or does not demonstrate to
Sublessee that the terms and conditions offered are at least equal to those
offered to such other purchasers, Sublessee shall be free to secure such
specified goods and merchandise from any source which it desires. If
United demonstrates that it is offering equal terms and in fact is offering
equal terms, and Sublessee nonetheless purchases from another source, such
purchase shall be a breach of this paragraph.
10.3 Termination of Subleases.
(a) Upon the occurrence of a Designated Event as defined
below, Sublessee may require Sublessor and United to terminate both this
Sublease and the United-to-Sublessor sublease and require United to assign
its interest in the Prime Lease to Sublessee. The assignment of United's
interest in the Prime Lease to Sublessee shall exclude all rights and
benefits under Paragraph 47 of the Prime Lease, which shall remain the
property of United. Upon such terminations and assignment Sublessee shall:
Pay all rents and perform all other obligations of the lessee under the
Prime Lease promptly when due; and indemnify Sublessor and United and hold
them harmless from any obligation or liability arising out of obligations
of the lessee which are due after the date of the terminations and
assignment; and promptly provide United or its successor in interest with
copies of any notices of default of the Prime Lease which are received by
Sublessee. Any of the following shall be a Designated Event: Sale or
transfer by Sublessor or United of any interest in this Sublease or the
United-to-Sublessor sublease to any third party; Sublessor or United being
a party to a merger or other reorganization which results in any person or
entity other than Sublessor or United having a controlling interest in the
surviving entity; transfer of 49 percent or more of the outstanding voting
stock in Sublessor or United to any other person or entity; or termination
of the membership of the store with Sublessor pursuant to Paragraph 10.1
above.
(b) Upon termination of this Sublease and the United-to-
Sublessor sublease pursuant to Subparagraph (a) above, Sublessee shall have
no further liabilities under this Sublease, absolute or contingent, direct
or indirect, with respect to causes of action or obligations arising or
accruing subsequent to the effective date of the termination.
10.4 No Commissions. Each of the parties hereto represent and
warrant that there are no brokers, finders or other persons entitled to any
fee, commission or other compensation in connection with this Sublease, and
agree to hold the other party harmless from any claims for such fees,
commissions and/or compensation.
10.5 Accuracy. Sublessee hereby represents and warrants to
Sublessor that the financial statements, appraisals and other documents
submitted to Sublessor in connection herewith or pursuant hereto are and
shall be true, correct, complete and accurate in every respect and said
financial statements fairly and accurately present the assets, liabilities,
financial condition and results of operation reflected herein.
11. Security Agreement.
11.1 Grant, Collateral and Obligations. Sublessee and Sublessor
agree that this Sublease shall constitute a security agreement within the
meaning of the Oregon Uniform Commercial Code (hereinafter referred to as
the "Code") with respect to:
(a) Required cash deposits (as defined in the bylaws of
United) presently or hereafter held by or deposited with United by
Sublessee with respect to the store on the premises;
(b) Any and all capital stock holdings or proceeds therefrom,
patronage rebates and rebate notes representing patronage rebates (as
defined in Bylaws of United) earned or hereafter earned by reason of
patronage of United by Sublessee with respect to the store on the premises;
(c) All replacements or substitutions for, and additions to
the foregoing, and the proceeds thereof (all of said personal property and
the replacements, substitutions and additions thereto and the proceeds
thereof being sometimes hereinafter collectively referred to as the
"Collateral"), and that a security interest in and to the Collateral is
hereby granted to the Sublessor, and all of the Sublessee's right, title
and interest therein are hereby assigned to the Sublessor, all to secure
all presently existing or hereafter incurred direct, indirect, absolute and
contingent indebtedness, liabilities and other obligations of Sublessee to
Sublessor which arise out of and are incident to this Sublease Agreement
(referred to as "the Obligations" herein) including, but not limited to,
the payment of all rent and other sums and the performance of all other
obligations of Sublessee under this Sublease, all renewals and extensions
thereof, and all costs of collection, legal expenses and attorney's fees
paid or incurred by Sublessor in enforcing any rights in respect to the
Obligations or in connection with assembling, collecting, selling or
otherwise dealing with or realizing upon the Collateral. Notwithstanding
the foregoing, so long as Sublessee is not in default hereunder, the cash
portion of all patronage rebates and rebate notes shall be paid to
Sublessee. Also notwithstanding the foregoing in the event of any
Designated Event described in Paragraph 10.3 above and Sublessee does not
elect to terminate the Sublease as provided in Paragraph 10.3 the cash
portion of any sale or transfer of any of the Collateral which is paid in
connection with a Designated Event shall be paid to Sublessee.
11.2 Security Agreement Warranties. In addition to and without
limiting the force or effect of any other covenants, representations and
warranties of Sublessee contained in this Sublease, Sublessee hereby
covenants, represents and warrants to and with Sublessor as follows:
(a) Sublessee is the owner of the Collateral free and clear of
all liens, security interests and encumbrances of every kind and
description, except liens, security interests and encumbrances securing
indebtedness to Sublessor and/or United.
(b) Sublessee will not sell, dispose of, encumber or permit
any other security interest, lien or encumbrance to attach to the
Collateral.
11.3 Additional Remedies. Upon any default hereunder and at any
time thereafter (such default not having previously been cured), Sublessor
at its option may declare all Obligations of Sublessee immediately due and
payable to the extent they would be due under the document or instrument
evidencing each obligation and shall have the remedies of a secured party
under the Uniform Commercial Code of Oregon (the "Code"), including without
limitation the right to take immediate and exclusive possession of the
Collateral.
11.4 Financing Statements. Sublessee will at its own costs and
expense, upon demand, furnish to Sublessor such financing statements and
other documents in form satisfactory to Sublessor and will do all other
such acts and things as Sublessor may at any time or from time to time
request or as may be necessary or appropriate to establish and maintain a
perfected security interest in the Collateral.
12. Attorneys' Fees. In the event of the institution of any suit or
action to terminate this Sublease, or to interpret or enforce the terms or
provisions hereto, the nonprevailing party shall and does hereby agree to
pay to the prevailing party, in addition to the costs and disbursements
provided by statute, reasonable attorneys' fees in such proceedings or on
any appeal from any judgment or decree entered therein.
13. Notices. Any notice or demand required or permitted to be given
under this Sublease shall be deemed to have been properly given when, and
only when, the same is in writing and has been deposited in the United
States mail, with postage prepaid, to be forwarded by registered or
certified mail and addressed to the party to be notified at the address
appearing below. Such addresses may be changed from time to time by
serving of notice as above provided.
SUBLESSOR With a Copy to:
United Resources, Inc. John H. Arenz, Esq.
6433 S.E. Lake Road Benson, Arenz, Lucas & Hay
P. O. Box 122187 1140 One Pacific Square
Portland, OR 97222 Portland, OR 97209
UNITED With a Copy to:
United Grocers, Inc. John H. Arenz, Esq.
6433 S.E. Lake Road Benson, Arenz, Lucas & Hay
P.O. Box 22187 1140 One Pacific Square
Portland, Oregon 97222 220 N.W. Second Avenue
Portland, Oregon 97209
SUBLESSEE With a Copy to:
CTD, L.L.C. Joy D. Abele, Esq.
P. O. Box 5490 P. O. Box 708
Oregon City, OR 97045 Oregon City, OR 97045
IN WITNESS WHEREOF, the parties have executed the foregoing Sublease
Agreement the date and year first above written.
UNITED: UNITED GROCERS, INC.
By Alan C. Jones
Its President
SUBLESSOR: UNITED RESOURCES, INC.
By Alan C. Jones
Its Vice President
SUBLESSEE: CTD, L.L.C.
By Carol Suzuki
Manager
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SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT is entered into this 3rd day of January, 1994 by
and between UNITED RESOURCES, INC., an Oregon corporation, hereinafter
designated as Sublessor, and CTD, L.L.C., an Oregon limited liability
company, hereinafter designated as Sublessee. UNITED GROCERS, INC., an
Oregon corporation, hereinafter designated as United, enters into this
Sublease solely for purposes of binding itself to the covenants contained
in paragraphs 4, 5.1, 10.1, 10.2 and 10.3 below.
W I T N E S S E T H:
WHEREAS, United has entered into a Lease Agreement dated May 26, 1987,
with JIM E. HEMSTREET, GREG A. HEMSTREET and LINDA D. LUSK, a copy of which
is attached hereto and marked Exhibit "A" ("the Prime Lease or
"Exhibit A"), and by this reference incorporated herein, as if its terms
and conditions were herein set forth, for a supermarket located in the
Aloha Market Center in Aloha, Oregon, commencing on the date described in
the Prime Lease.
WHEREAS, United has subleased the premises to Sublessor by Sublease dated
June 1, 1988.
WHEREAS, Sublessee desires to sublet said premises for a period of
approximately nineteen (19) years with certain renewal rights as provided
in the Prime Lease and Sublessor is willing to so sublet in accordance with
the terms and conditions hereinafter set forth; now, therefore,
IT IS HEREBY AGREED as follows:
1. Term. Sublessor hereby sublets unto Sublessee those premises
described in said Exhibit A, for the remainder of the Prime Lease, which is
approximately nineteen (19) years, commencing on January 3, 1994.
1.1 The Sublessee, so long as it is not in default hereunder, shall
be granted the right to exercise any and all renewal options contained in
Exhibit A, upon the condition that Sublessee is not in default of this
Sublease.
2. Rent. Sublessee covenants and agrees to pay for the whole of said
term the same rental, together with all affirmative covenants including,
without limitation, those pertaining to basic rent, percentage of gross
sales, taxes, assessments, insurance and all of the covenants and
obligations to be performed by Lessee, as set forth in said Exhibit A, and
to make such payments and provide such performance when due by the terms of
the Prime Lease and any amendments thereto.
3. Deposits. Sublessee shall, upon execution hereof, pay any and all
rental or security deposits, as required pursuant to the terms and
conditions of said Exhibit A.
4. Prime Lease. Sublessee shall be bound by and have the benefit of
the same responsibilities, rights, privileges and duties of United, as
enumerated in Exhibit A, except for United's rights under Paragraph 45,
Page 12, which are expressly retained by United, and covenants and agrees
to fully indemnify and hold Sublessor and United harmless from any and all
responsibility and/or liability which Sublessor or United may incur by
virtue of said Exhibit A, and/or Sublessee's occupancy of the premises
during the term and any renewals of this Sublease. Furthermore, Sublessee
shall be bound by any subsequent amendment, revision, supplement or
addition to the Prime Lease but neither Sublessor nor United shall enter
into any subsequent amendment, revision, supplement or addition to the
Prime Lease without the prior written consent of Sublessee, which consent
shall not be unreasonably withheld.
5. Default. The following shall constitute a default under this
Sublease:
5.1 Any failure by Sublessee to pay when due rent or any other
amount due under the Prime Lease, or to perform when due any other
obligation of United under the Prime Lease, or any other default under the
Prime Lease which continues for up to 70 percent of the cure period
provided with respect thereto in the Prime Lease; Sublessor and United
covenant and agree that upon receipt from Lessor of any notice of default
or alleged defaults to promptly supply Sublessee with a copy of said
notice;
5.2 Any failure by Sublessee to perform when due any other
obligations of Sublessee hereunder within thirty (30) days after written
notice of said default except that if the failure can reasonably be
corrected within 30 days the Sublessee shall not be in default if Sublessee
promptly begins to correct the failure and continues to pursue such
correction to completion;
5.3 If any warranty, representation or statement made or furnished
to Sublessor by or on behalf of the Sublessee is false in any material
respect when made or furnished;
5.4 Any failure by Sublessee to pay and/or satisfy within
twenty (20) days after written notice to Sublessee specifying the failure
with reasonable particularity, any present or hereafter incurred
indebtedness or obligation of Sublessee to United or Sublessor with respect
to the retail operation upon the premises which exceeds $75,000 and arises
from Sublessor's or United's extensions of credit to Sublessee;
5.5 Sublessee vacates, abandons or fails continuously to occupy and
to conduct its business on the leased premises, except as caused by a
strike, remodeling first approved by Sublessor, Act of God, or other cause
beyond the reasonable control of Sublessee; Sublessor shall respond within
fifteen (15) working days to any notice from Sublessee requesting consent
to remodeling, which shall not be unreasonably withheld, or Sublessor shall
be deemed to have consented;
5.6 Sublessee makes a general assignment for the benefit of
creditors; admits in writing its inability to pay its debts as they become
due; files a petition in bankruptcy; is adjudicated a bankrupt or
insolvent; files a petition seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief
under any present or future statute, law or regulation; fails timely to
contest the material allegations of a petition filed against it in any
bankruptcy proceeding, or seeks, consents to or acquiesces in the
appointment of any trustee, receiver or liquidator of Sublessee or any
material part of its properties.
6. Remedies. In the event of any default under this Sublease:
6.1 Sublessor shall have the right, at its election, upon notice to
Sublessee, to terminate this Sublease or to terminate Sublessee's right of
possession in the premises without terminating this Sublease;
6.2 Sublessor shall have the immediate right, whether or not the
Sublease shall have been terminated pursuant to Paragraph 6.1, to re-enter
and repossess the premises or any part thereof by force, summary
proceedings, ejectment or any other legal or equitable process, all without
any liability on Sublessor's part for such entry, repossession or removal;
6.3 Sublessor may, whether or not this Sublease shall have been
terminated pursuant to Paragraph 6.1, resublet the premises, or any part
thereof, in the name of Sublessee, Sublessor or otherwise, without notice
to Sublessee, for such term or terms and for such uses as Sublessor, in its
reasonable discretion, may determine and may collect and receive rents
payable by reason of such resubletting (without any liability for any
failure to collect such rents). Notwithstanding the foregoing, the
Sublessor shall be subject to such common law duties of mitigation of
damages, if any, as are imposed upon the lessor under the Prime Lease;
6.4 Sublessor may (but shall be under no obligation to) procure any
insurance, pay any rentals, taxes or liens, make any repairs, pay any sums
required to be paid, and to do and perform such other acts as may be
required of Sublessee hereunder, and any payments so made shall bear
interest at the rate of 12 percent per annum from the time of such payment
until repaid; and
6.5 Sublessor may exercise any and all other rights and remedies
afforded to the lessor under the Prime Lease upon default under the Prime
Lease and any and all other rights and remedies Sublessor may have pursuant
to the laws of the State of Oregon. In addition to the other remedies
provided above, Sublessor shall be entitled to current damages and final
damages as provided in Paragraph 7 below, and, to the extent permitted by
applicable law, to injunctive relief in case of the violation, or attempted
or threatened violation, of any of the provisions of this Sublease, or to a
decree compelling performance of this Sublease. Notwithstanding the above,
Sublessor shall not be entitled to double damages.
6.6 No expiration or termination of this Sublease, repossession of
the premises or any part thereof, or resubletting to the above paragraph or
by operation of law or otherwise, shall relieve Sublessee of its
liabilities and obligations under this Sublease, all of which shall survive
such expiration, termination, repossession or resubletting.
7. Damages.
7.1 Current Damages. In the event of any expiration or termination
of this Sublease or repossession of the premises or any part thereof by
reason of the occurrence of any event of default, Sublessee will pay to
Sublessor the rent and other sums required to be paid by Sublessee for the
period to and including the date of such expiration, termination or
repossession; and thereafter, until the end of what would have been the
term in the absence of such expiration, termination or repossession, and
whether or not the premises or any part thereof shall have been resublet,
Sublessee shall be liable to Sublessor for, and shall pay to Sublessor, as
liquidated and agreed current damages the rent and other sums which would
be payable under this Sublease by Sublessee in the absence of such
expiration, termination or repossession, less the net proceeds, if any of
any resubletting effected for the account of the Sublessee, after deducting
from such proceeds all of Sublessor's expenses reasonably incurred in
connection with such resubletting (including, without limitation, all
repossession costs, brokerage commissions, legal expenses, attorney's fees,
alteration costs and expenses of preparation for such resubletting).
Sublessee will pay such current damages on the days on which rent would
have been payable under this Sublease in the absence of such expiration,
termination or repossession, and Sublessor shall be entitled to recover the
same from Sublessee on each such day.
7.2 Final Damages. At any time after any such expiration or
termination of this Sublease or repossession of the premises or any part
thereof by reason of the occurrence of any event of default, whether or not
Sublessor shall have collected any current damages pursuant to
Paragraph 7.1, Sublessor shall be entitled to recover from Sublessee, and
Sublessee will pay to Sublessor on demand, as and for liquidated and agreed
final damages for Sublessee's default and in lieu of all current damages
beyond the date of such demand (it being agreed that it would be
impracticable or extremely difficult to fix the actual damages), an amount
equal to the excess, if any of (a) the rent and other sums which would be
payable under this Sublease from the date of such demand (or, if it be
earlier, the date to which Sublessee shall have satisfied in full its
obligations under Paragraph 7.1 to pay current damages) for what would be
the then unexpired term in the absence of such expiration, termination or
repossession, discounted to present value at an assumed interest rate of
ten percent (10%) per annum, over (b) the then net rental value of the
premises discounted to present value at an assumed interest rate of ten
percent (10%) per annum for the same period. Rental value shall be
established by reference to the terms and conditions upon which Sublessor
resublets the premises if such resubletting is accomplished within a
reasonable period of time after such expiration, termination or
repossession, and otherwise established on the basis of Sublessor's
estimates and assumptions of fact regarding market and other relevant
circumstances, which shall govern unless shown to be erroneous. If any
statute or rule of law shall validly limit the amount of such liquidated
final damages to less than the amount above agreed upon, Sublessor shall be
entitled to the maximum amount allowable under such statute or rule of law.
8. Rights Cumulative, Nonwaiver. No right or remedy herein conferred
upon or reserved to Sublessor is intended to be exclusive of any other
right or remedy, and each and every right and remedy shall be cumulative
and in addition to any other right or remedy given hereunder or now or
hereafter existing at law or in equity or by statute. The failure of
Sublessor to insist at any time upon the strict performance of any covenant
or agreement or to exercise any option, right, power or remedy contained in
this Sublease shall not be construed as a waiver or relinquishment thereof
for the future. No waiver by Sublessor of any provision of this Sublease
shall be deemed to have been made whether due to receipt of rent or
otherwise, unless expressed in writing and signed by Sublessor.
9. Assignment and Subletting. Sublessee acknowledges that provisions
for assignment and subletting in the Prime Lease are applicable to the
lessor under the Prime Lease and Sublessor only. Except as provided below
Sublessee will not assign this Sublease or sublet in excess of 6,000 square
feet of the premises without the prior written consent of Sublessor, which
consent shall not be unreasonably withheld. A transfer of ownership of a
majority interest in Sublessee, by whatever procedure, shall be deemed an
assignment of this Sublease for the purposes of this paragraph except that
transfers by sale, gift, exchange or as a result of the death of a member
to the spouses and/or children of a member or transfers to a corporation,
partnership, estate, trust or other entity which is controlled by member(s)
of Sublessee and/or their spouses or children or transfers between existing
members shall not be deemed to be an assignment of this Sublease. For
purposes of this paragraph the members who hold ownership of Sublessee are
Craig T Danielson and Carol D. Suzuki.
10. Covenants, Representations and Warranties.
10.1 Membership in United. Sublessee agrees to maintain or cause to
be maintained the membership of the store in good standing with United
except in the following circumstances:
(a) Upon payment to United of $100,000 at any time prior to
the fifth annual anniversary of the commencement date specified in
Paragraph 1 above, or
(b) At any time after a change from the identity of the
President or Chief Executive Officer of United from the holder of those
offices on the date of this Sublease, or
(c) At any time after United consummates a reorganization.
The term "reorganization" shall mean a merger or consolidation with another
entity; dissolution; transfer of any significant portion of the assets of
United to another entity whether newly formed or not; sale or exchange or
other transfer of more than 49 percent of the outstanding shares of
membership in United to another person or entity; or the acquisition by
United of more than 49 percent of the outstanding shares or other evidences
of ownership or membership in any other entity; or
(d) At any time which is after the fifth annual anniversary of
the commencement dated specified in Paragraph 1 above.
10.2 Purchase from United.
(a) Sublessee agrees that throughout the term of the Sublease
and any extensions or renewals thereof (except as hereinafter provided),
and so long as Sublessee has not terminated its membership of the store
with United in accordance with the provisions of Paragraph 10.1 above, and
subject to the provisions of Paragraphs (b) and (c) below, Sublessee will
purchase from United not less than sixty-four percent (64%) of its total
wholesale purchases on a monthly basis, of all goods and merchandise
purchased for resale on the premises to the extent that United shall now or
thereafter be able to supply such goods and merchandise to the Sublessee,
and United will supply all of Sublessee's requirements at such prices and
on such terms at least equal to the most favorable prices and terms offered
by United to other purchasers from United. Effective on the date of a
termination of the store's membership in United pursuant to the provisions
of Paragraph 10.1 above, this Paragraph 10.2 shall terminate and Sublessee
shall have no further obligation to purchase from United.
(b) The following items purchased by Sublessee shall be
excluded from total wholesale purchases for purposes of calculating the
64 percent requirement:
(1) Items for which United is out of stock or which are
not stocked by United.
(2) Items purchased elsewhere by Sublessee for 90 percent
or less of United's book price on the date of order by Sublessee.
(3) Items purchased in order to meet a minimum required
order amount if the order is placed due to circumstances described in the
other sections of this Subparagraph (b).
(4) Items purchased directly from a pharmacy or hardware
wholesaler such as McKesson or Cotter & Co.
(5) Drop shipments, relays and specialized meat items.
(c) If, at any time, Sublessee contends that United is not
able to supply particular goods or merchandise customarily stocked by
retail supermarkets in Portland, Oregon, or that terms offered by United to
Sublessee are not at least equal to those offered by United to other
purchasers as described above, Sublessee shall so advise United in writing,
specifying such contention with particularity. If, within thirty (30) days
after receipt of such notice, United does not offer by written notice to
supply goods or merchandise so specified or does not demonstrate to
Sublessee that the terms and conditions offered are at least equal to those
offered to such other purchasers, Sublessee shall be free to secure such
specified goods and merchandise from any source which it desires. If
United demonstrates that it is offering equal terms and in fact is offering
equal terms, and Sublessee nonetheless purchases from another source, such
purchase shall be a breach of this paragraph.
10.3 Termination of Subleases.
(a) Upon the occurrence of a Designated Event as defined
below, Sublessee may require Sublessor and United to terminate both this
Sublease and the United-to-Sublessor sublease and require United to assign
its interest in the Prime Lease to Sublessee. The assignment of United's
interest in the Prime Lease to Sublessee shall exclude all rights and
benefits under Paragraph 45 of the Prime Lease, which shall remain the
property of United. Upon such terminations and assignment Sublessee shall:
Pay all rents and perform all other obligations of the lessee under the
Prime Lease promptly when due; and indemnify Sublessor and United and hold
them harmless from any obligation or liability arising out of obligations
of the lessee which are due after the date of the terminations and
assignment; and promptly provide United or its successor in interest with
copies of any notices of default of the Prime Lease which re received by
Sublessee. Any of the following shall be a Designated Event: Sale or
transfer by Sublessor or United of any interest in this Sublease or the
United-to-Sublessor sublease to any third party; Sublessor or United being
a party to a merger or other reorganization which results in any person or
entity other than Sublessor or United having a controlling interest in the
surviving entity; transfer of 49 percent or more of the outstanding voting
stock in Sublessor or United to any other person or entity; or termination
of the membership of the store with Sublessor pursuant to Paragraph 10.1
above.
(b) Upon termination of this Sublease and the United-to-Sublessor
sublease pursuant to Subparagraph (a) above, Sublessee shall have no
further liabilities under this Sublease, absolute or contingent, direct or
indirect, with respect to causes of action or obligations arising or
accruing subsequent to the effective date of the termination.
10.4 No Commissions. Each of the parties hereto represent and
warrant that there are no brokers, finders or other persons entitled to any
fee, commission or other compensation in connection with this Sublease, and
agree to hold the other party harmless from any claims for such fees,
commissions and/or compensation.
10.5 Accuracy. Sublessee hereby represents and warrants to
Sublessor that the financial statements, appraisals and other documents
submitted to Sublessor in connection herewith or pursuant hereto are and
shall be true, correct, complete and accurate in every respect and said
financial statements fairly and accurately present the assets, liabilities,
financial condition and results of operation reflected herein.
11. Security Agreement.
11.1 Grant, Collateral and Obligations. Sublessee and Sublessor
agree that this Sublease shall constitute a security agreement within the
meaning of the Oregon Uniform Commercial Code (hereinafter referred to as
the "Code") with respect to:
(a) Required cash deposits (as defined in the bylaws of
United) presently or hereafter held by or deposited with United by
Sublessee with respect to the store on the premises;
(b) Any and all capital stock holdings or proceeds therefrom,
patronage rebates and rebate notes representing patronage rebates (as
defined in Bylaws of United) earned or hereafter earned by reason of
patronage of United by Sublessee with respect to the store on the
premises.
(c) All replacements or substitutions for, and additions to
the foregoing, and the proceeds thereof (all of said personal property and
the replacements, substitutions and additions thereto and the proceeds
thereof being sometimes hereinafter collectively referred to as the
"Collateral"), and that a security interest in and to the Collateral is
hereby granted to the Sublessor, and all of the Sublessee's right, title
and interest therein are hereby assigned to the Sublessor, all to secure
all presently existing or hereafter incurred direct, indirect, absolute and
contingent indebtedness, liabilities and other obligations of Sublessee to
Sublessor which arise out of and are incident to this Sublease Agreement
(referred to as "the Obligations" herein) including, but not limited to,
the payment of all rent and other sums and the performance of all other
obligations of Sublessee under this Sublease, all renewals and extensions
thereof, and all costs of collection, legal expenses and attorney's fees
paid or incurred by Sublessor in enforcing any rights in respect to the
Obligations or in connection with assembling, collecting, selling or
otherwise dealing with or realizing upon the Collateral. Notwithstanding
the foregoing, so long as Sublessee is not in default hereunder, the cash
portion of all patronage rebates and rebate notes shall be paid to
Sublessee. Also notwithstanding the foregoing in the event of any
Designated Event described in Paragraph 10.3 above and Sublessee does not
elect to terminate the Sublease as provided in Paragraph 10.3 the cash
portion of any sale or transfer of any of the Collateral which is paid in
connection with a Designated Event shall be paid to Sublessee.
11.2 Security Agreement Warranties. In addition to and without
limiting the force or effect of any other covenants, representations and
warranties of Sublessee contained in this Sublease, Sublessee hereby
covenants, represents and warrants to and with Sublessor as follows:
(a) Sublessee is the owner of the Collateral free and clear of
all liens, security interests and encumbrances of every kind and
description, except liens, security interests and encumbrances securing
indebtedness to Sublessor and/or United.
(b) Sublessee will not sell, dispose of, encumber or permit
any other security interest, lien or encumbrance to attach to the
Collateral.
11.3 Additional Remedies. Upon any default hereunder and at any
time thereafter (such default not having previously been cured), Sublessor
at its option may declare all Obligations of Sublessee immediately due and
payable to the extent they would be due under the document or instrument
evidencing each obligation and shall have the remedies of a secured party
under the Uniform Commercial Code of Oregon (the "Code"), including without
limitation the right to take immediate and exclusive possession of the
Collateral.
11.4 Financing Statements. Sublessee will at its own costs and
expense, upon demand, furnish to Sublessor such financing statements and
other documents in form satisfactory to Sublessor and will do all other
such acts and things as Sublessor may at any time or from time to time
request or as may be necessary or appropriate to establish and maintain a
perfected security interest in the Collateral.
12. Attorneys' Fees. In the event of the institution of any suit or
action to terminate this Sublease, or to interpret or enforce the terms or
provisions hereto, the nonprevailing party shall and does hereby agree to
pay to the prevailing party, in addition to the costs and disbursements
provided by statute, reasonable attorneys' fees in such proceedings or on
any appeal from any judgment or decree entered therein.
13. Notices. Any notice or demand required or permitted to be given
under this Sublease shall be deemed to have been properly given when, and
only when, the same is in writing and has been deposited in the United
States mail, with postage prepaid, to be forwarded by registered or
certified mail and addressed to the party to be notified at the address
appearing below. Such addresses may be changed from time to time by
serving of notice as above provided.
SUBLESSOR With a Copy to:
United Resources, Inc. John H. Arenz, Esq.
6433 S.E. Lake Road Benson, Arenz, Lucas & Hay
P. O. Box 122187 1140 One Pacific Square
Portland, OR 97222 Portland, OR 97209
UNITED With a Copy to:
United Grocers, Inc. John H. Arenz, Esq.
6433 S.E. Lake Road Benson, Arenz, Lucas & Hay
P.O. Box 22187 1140 One Pacific Square
Portland, Oregon 97222 220 N.W. Second Avenue
Portland, Oregon 97209
SUBLESSEE With a Copy to:
CTD, L.L.C. Joy D. Abele, Esq.
P. O. Box 5490 P. O. Box 708
Oregon City, OR 97045 Oregon City, OR 97045
IN WITNESS WHEREOF, the parties have executed the foregoing Sublease
Agreement the date and year first above written.
UNITED: UNITED GROCERS, INC.
By Alan C. Jones
Its President
SUBLESSOR: UNITED RESOURCES, INC.
By Alan C. Jones
Its Vice President
SUBLESSEE: CTD, L.L.C.
By Carol Suzuki
Manager
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